After months of horse-race coverage the results are in and Republicans have taken control of the United States Senate and expanded their control of the House of Representatives. While this will likely change many aspects of U.S policy, for the next two years at least, the trade picture for U.S. multi-nationals could see effects that are nearly immediate.
Those changes are partially structural- U.S, presidents often turn to international and domestic trade issues during the last two years of their presidency, as it tends to be an area of bi-partisan cooperation. Bill Clinton crafted his trade agreement in China during the last two years of his presidency, while George W. Bush turned to South America.
However much of what is forecasted to come next on the global trading stage for American companies is specific to the change of power that will be happening in about two months in Washington D.C.. From the perspective of international trade, the ascension of the Reupblican part to control of the Congress may represent a dual edged sword when it comes to carrying out trade and getting in it financed (particularly in developing nations where banking institutions are under developed)
The conventional wisdom says that Republican control of the Senate may now be more likely to consider and pass the Trans Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP). Democrats had previously sought to block both on environmental, labor, and fair trade concerns.
U.S. Trade Representative Michael Froman and European Union Trade Commissioner Cecelia Malmstrom have already agreed to reinvigorate trade talks, meanwhile U.S. based business interests have already begun to advocate for trade agreements and provide support for giving the President “fast track” trade promotion authority to negotiate and pass such agreements.
The Trade Promotion Authority (TPA) had started to received bi-partisan support prior to election day, and Republican control of the U.S. Senate could accelerate and makes more possible U.S. trade legislation.
However, the new base of the Republican part in Tea Party groups, which tend to toward anti-free trade positions as fundamentally damaging to the American economy and worker, might look to circumvent these sort of agreements. Given that there is broad-based moderate support for both the TPP and TTIP, it seems likely that these could see passage.
More up in the air, however, is the future and fate of the U.S. Export-Import bank. The Em-Im bank provides financing for American companies looking to do a variety of trade practices oversees – including trade finance, letters of credit, etc. – and is particularly helpful with working with partners for whom traditional financing is complicated by an underdeveloped banking system. It has been particularly unpopular with conservative and Tea Party activists, led by Senator Rand Paul who have crusaded against the bank as a particularly pernicious corporate welfare that uses U.S. tax dollars to finance foreign enterprise.
This has put the Tea Pat at odds with so-call “Chamber of Commerce Republicans,” who believe in the bank, note that it is revenue positive (it doesn’t cost tax payers money, it makes tax-payers money through interest) and think it is a necessary tool for international trade and finance.
Again, while it is possible that bi-partisan support could push the renewal of the Em-Im bank through- it is likely that the bank will se several reforms and changes to satisfy conservative Republican concerns.